Categories: Business

cabinet approves capital infusion in 3 state run insurance companies

Photo: FILE PHOTO

cabinet approves capital infusion in 3 state run insurance companies

new Delhi. The government on Wednesday decided to halt the merger process of three public sector general insurance companies, Oriental Insurance, National Insurance and United India Insurance, and infuse new capital into them. The government will now infuse capital of Rs 12,450 crore into these companies to improve their financial condition. The decision was approved in a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday.

Along with this, the Cabinet also approved to increase the authorized share capital of these companies. Under this, the authorized capital of National Insurance Company Limited will be increased to Rs. 7,500 crore and the authorized capital of United India Insurance and Oriental Insurance Company will be increased to Rs. Five thousand crore. "Considering the current situation, the merger process has been postponed for now and now instead of these companies will focus on profit growth," an official release said.

The release said that the proposal to infuse capital of Rs 12,450 crore approved by the Cabinet includes the amount of Rs 2,500 crore added to these companies in 2019-20. Now an amount of Rs 3,475 crore will be released immediately, while the remaining Rs 6,475 crore will be released later. The government has made a provision of Rs 6,950 crore to infuse capital in these three companies in the budget of 2020-21.

After the meeting, Information and Broadcasting Minister Prakash Javadekar told reporters that recapitalization will make these government insurance companies more stable. The statement said, "To ensure optimum utilization of the capital being provided, the government has issued guidelines in the form of KPIs (Key Performance Indicators). In addition, the infusion of capital to three government general insurance companies And will enable the capacity to improve solvency, meet the insurance needs of the economy, absorb changes, increase resources and improve risk management. ''

This post was published on July 8, 2020 10:30 pm

Content Team

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